When a child's parents are divorced, only one of them can claim that child as a dependent. Usually, that's the parent with custody of the child. However, the Internal Revenue Service allows a non-custodial parent to claim the child as a dependent. If you have full custody but your divorce papers say your ex-spouse can claim the child, IRS rules dictate what both of you must do.
The ability to claim a child as a dependent carries a couple important tax benefits. First, it entitles the parent to a dependent exemption for the child. An exemption is an amount of money -- $3,700 as of the time of publication -- that can be automatically deducted from taxable income. In addition, only the parent who can claim the child as a dependent is entitled to the child tax credit, which can reduce the parent's tax bill by up to $1,000.
For a non-custodial divorced parent to claim a child as a dependent, the situation must meet several conditions. If those conditions aren't met, he can't claim the child, regardless of what it says in the divorce decree. First, the parents -- the two of them, combined -- must provide more than half of the child's financial support for the year. Second, the child must live with one or both parents for more than half the year. Third, the non-custodial parent must attach to his return evidence that he is entitled to claim the child. The kind of evidence he must provide depends on when the divorce became final.
The IRS has a special form -- Form 8332 -- for custodial parents to waive their right to claim a child as a dependent. The custodial parent fills out and signs the form, then provides it to the non-custodial parent, who attaches it to his return. For divorces that became final in 2009 or later, Form 8332 is the only evidence that the IRS will accept to allow a non-custodial parent to claim a child as a dependent. For divorces that became final in 2008 and earlier, the non-custodial parent can attach Form 8332 to his return, or he can attach copies of specific pages from the divorce decree.
Pages to Attach
If the non-custodial parent has the option of attaching pages from the decree, he must include the cover page, with the custodial parent's Social Security number written on it; the signature page; and the pages that include the provisions granting him the right to claim the child. Those provisions must say that the right to claim the child is unconditional, not contingent on paying child support or anything else. They must state that the custodial parent will not claim the child for the current tax year. They must also identify which years the non-custodial parent is entitled to claim the child. If such language isn't included in the decree, then the non-custodial parent will have to attach Form 8332.
Refusing to Sign
If you have full custody of a child and your ex-spouse needs to you to sign Form 8332, it may be tempting to simply refuse to sign. But be aware that a divorce decree is a legally binding document. According to San Mateo, California, family law specialist Steven A. Leff, if the decree orders that you allow your ex-spouse to claim the child, and you refuse to cooperate in making that happen, you could be found in contempt of court.